European shares were fighting to hold their ground on Friday after a turbulent day for Asia markets that saw a sudden reversal in some very popular, and thus crowded, trades.
The result was a pullback in the euro, sterling, and Asian stocks and a bounce for the yen, gold and bonds. Oil prices also took a spill, though for largely separate reasons.
Europe's pan-regional FTSEurofirst 300 share index .FTEU3 struggled to fight the tide. It moved in and out of negative territory in early trading before finally gaining 0.3 percent. .EU
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS had earlier shed 1 percent, with markets from Shanghai to Sydney all in the red.
The various moves seemed divorced from the news flow, which was mostly upbeat. Global manufacturing ended 2013 on a strong note as the United States, Japan and Germany all saw demand pick up. The problem was China, where a measure of activity in the services sector slipped back in December, just as one for manufacturing had on Thursday.
In currencies, the euro weakened as speculators booked profits on long positions after a strong 2013. The common currency was testing a six-week low at $1.3635 after shedding a full cent overnight.
The same forces gripped sterling, another strong performer in recent months. The pound peeled away to $1.6450 from a 28-month peak of $1.6605.
Going the other way, the yen enjoyed a short-covering bounce. Borrowing in yen to buy higher-yielding assets has been a popular trade, leaving the market vulnerable to sudden, if usually brief, reversals.
In this case, the dollar came off to 104.20 yen after rising as high as 105.44 on Thursday, its strongest since October 2008. The euro retreated to 142.10 yen from a peak of 145.12 on Thursday.
"The yen is strong because it remains the major currency market's best proxy for risk, so when you have a strong correction lower in risk appetite that sees the yen supported," said John Hardy head of FX strategy for Saxo bank in Copenhagen. "I suspect it is a bit of a knee-jerk consolidation at the start of the year, but it is interesting that it started that way
Another source of anxiety in Asia had been Thailand. Growing political uncertainty lopped another 0.5 percent off stocks, after a 5 percent decline on Thursday .SETI. The Thai currency also took a bath, hitting its lowest since early 2010 at 33.03 per dollar.
The short-covering theme meanwhile extended to U.S. Treasury debt, which has been under pressure for pretty much all of the past two months. Yields on the 10-year note dipped to 2.97 percent from a top of 3.04 percent, which had been the highest since mid-2011.
German and other top-rated European government bonds mirrored the moves as they opened.
Gold was another beaten-down asset to get a reprieve, along with silver and platinum. Bullion had swung up to $1,233 after the early flurry of trading in London, from as low as $1,183.80 early in the week.
"Positive bullion prices in reaction to the decline in equities may set the tone for 2014 and reinforce the negative correlation between the two," HSBC analysts said in a note.
Oil prices steadied after taking a fall on Thursday as Libya prepared to restart a major oilfield and on speculation of a sharp rise in crude stockpiles in the United States.
Brent crude edged up 70 cents to $108.50 a barrel but that followed a drop of $2.98 on Thursday. U.S. crude was up 19 cents at $95.60, after shedding almost $5 the day before.